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Ackman's Presentation on BK — Justice Is Best Served Flame Broiled


farnamstreet
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Thanks for posting.

 

I was a fan of BK when I was a kid. Back then it seemed that BK was equivalent to Mcdonalds. It really deteriorated over the years.

 

I have not been to a BK in many years.

 

I heard that ACKman was buying 25% +  that they may be going public so I thought I would do some field work + so I went to local BK...they were fairly busy. I tried their Whopper-I thought it was pretty good except that it seemed smaller than what I remember. I grew up with the slogan "it takes 2 hands to handle a whopper". I think they should go to larger version.

 

Biggest negative on their food was their french fries were absolutely terrible-who ever was in charge of food obviously was more interested in short term profit then actually the quality of their product which could explain their deteriation over the years. Good to hear that they changed their fries though I have not tried them.

Concerns:

re valuation- 13-15 x EBITDA-capex ? Never seen this metric used. Makes me leary. Why not just use FCF/EV?

Why are they selling shares to the public if it is so compelling?

 

Mr Ackman is a way smarter + successful than I will ever be, but wonder what we can learn from presentation.

 

I know he likes the royalty/franchise model where you just collect your 5 % (I like that too)

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http://dealbook.nytimes.com/2012/04/04/ackmans-influence-on-burger-kings-future/

 

"Here is one way to look at the deal.

 

Justice Holdings, the vehicle promoted by the Ackman/Franklin/Bergruen Cabal, with less than a year before they blind pool would have to return the investors capital for failure to complete a deal, will pay over the $1.4b on cash to G3.

 

G3 will have accomplished the following - get back virtually its entire equity investment in Burger King in less than 18 months, while keeping a 71% stake with control, by inducing Justice to buy into a value that implies a 3x return on G3's cost.

 

Ackman and his cronies are getting played here,"  -Comment from reader

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13-15 x EBITDA-capex.. yes, those are wildly optimistic expectations.. Did you look at the restaurant growth expectations in next 4 years?

 

17K from current 12K.. Interesting indeed!

 

On these same metrics, what would they pay for Wendys? ARPU are >20% higher than current Burger King.

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